161 entries from July 2008

July 31, 2008

I have been renting a house, from a friend, for six months. He has asked me if I want to buy the house and has offered me a very good price. (approx. $10-15K below comps in the area) Can I just hand him the money and him sign over the title like a car? I plan to make sure the title is clear before I do anything else, of course! Should I hire a real estate lawyer?

Personally, I'd hire a lawyer and make sure it was a 100% a solid transaction. Any additional thoughts?

The median net worth of married-couple households in the latest Census Bureau wealth study, conducted in 2002, was $101,975. For single men, median wealth was $23,700. For single women, $20,217.

A 15-year study of 9,000 people found that during that time, people who married and stayed married built up nearly twice the net worth of people who stayed single. Even when all other factors are held constant -- stuff like income and education -- just the fact that they were married contributed to a 4% annual rise in these couples' wealth.

Wealth declines typically started four years before a divorce was final, and the breakup ultimately reduced the typical person's net worth by 77% of that of the average single person.

The piece also suggests how you should handle the "business" side of marriage, but that wasn't nearly as interesting to me as the facts above.

Here are a few thoughts I had on the numbers they presented:

1. I wonder if they factored in age when the compared marrieds versus singles. A good portion of single people are young and thus likely to earn less than (married) people more established in their careers. I know we've said that income doesn't equal net worth, but it sure does give a person a good head start.

2. The second set of facts seems the most powerful to me. Seems pretty clear that marriage does lead to a rise in net worth. Maybe it's because major expenses like housing are split among two people versus being totally paid by one person. Think this could be the cause for at least part of the 4% increase?

3. Ouch! Divorce can lead to a huge financial hit. My thought is that the declining finances for four years probably contributed to the divorce. Then, once the divorce occurs, each person takes another financial hit. Make sense?

I'm a sucker for "the best money advice you've ever received." There's just something about a lot of good, solid financial wisdom in a small number of words that I love. In fact, I've run several series on the topic including the following:

It's hard to be certain of anything in our uncertain financial markets. But I feel very confident about one piece of advice: Minimize your investment expenses. The less you pay in mutual fund fees, brokerage costs, sales fees and taxes, the greater your net return.

A mother and daughter in difficult financial straits escaped injury this morning when a candle they were using for illumination in their Northglenn townhouse tipped over and started a fire.

"They had some financial struggles and power had been shut off at in their home, so they were living by candlelight," Wendy Krajewski, spokeswoman for North Metro Fire Rescue, said.

"That's what ended up being the cause of the fire. Someone forgot to extinguish a candle. It tipped over and the fire spread."

So sad.

And on a related note, here's a guy who set himself on fire because of debts incurred:

A Newark man frustrated with the volume of late payment notices and collection calls he received from a Bloomfield Rent-A-Center store, walked into the business Tuesday and set himself ablaze in front of several employees and customers.

"He basically pulled out a bottle of lighter fluid, poured it all over his body, pulled out a cigarette lighter and lit himself on fire," Bloomfield Police Capt. Chris Goul said.

If you're in debt and having a hard time dealing with the collection calls and notices, there's help available. The first thing to do is to familiarize yourself with the Fair Debt Collection Practices Act. If you're being harassed, you can sent a letter to the debt collector demanding that they stop contacting you. They do not have the right to keep contacting you simply to try to get you to pay. You can also do a little research and locate some free or low cost legal help in your area. If you have a lawyer, the debt collectors are required to contact the attorney instead of you. If the debt collectors don't follow these rules, you can sue them! Not being able to pay your bills can be a humiliating experience, but don't give up.

I echo their suggestion to not give up. There are always better solutions than harming yourself or others.

I've been seeing a lot on networking as a key part of managing your career and thought I'd comment on a few pieces. The first is from Yahoo and lists five ways to keep your career moving forward. Cultivating your network is on their list. Here's what they have to say about it:

Brown-Volkman, author of "Don't Blow It: The Right Words for the Right Job," believes networking should always be a part of your professional life. She states, "If you start to network only when you need something, you will have a lot of catching up to do." Instead of waiting until the 11th hour, she advises workers to network in some way every day.

"Wherever there are people, there is an opportunity to network." She also urges workers to network within their own workplaces. If coworkers understand what you do and your value, this could help safeguard your job in dicey times.

I agree 100% -- you need to establish and grow a network and you need to do so BEFORE you need it. This idea worked well for me. I expanded my network before I needed it, and when I was ready to make a job move, my network was there to help me out. Now I have the best job of my career.

I was laid off Thursday morning. By Thursday afternoon, I had logged over 50 phone calls. My message was simple: “What jobs are available at your company? Who do you know who is hiring? Who else should I call?”

Even with the lousy economy, I had three interviews set up by the next day. The next week I had seven interviews. Within a week I had two job offers with a third coming. Within two weeks I had a job with a better company.

The best part? I received a promotion and am now selling against my former employer!

Exactly my point. Build your network before you need it and it will be there in your time of trouble.

So, where can you build your network? Here are few suggestions that have worked for me:

Here's a comment left on my post titled The Other America that struck a note with me. Recall that the post was about a CBS video series on people who are barely making it (if making it at all) due to the high food prices and "lack" of government assistance. One reader said the following:

I watched the segment. I saw meat, meat, meat, fruit loops, frozen waffles. A local newspaper article here said a family of 4 gets $550 in SUPPLEMENTAL (i.e. add your own money to it) food stamps. I could feed my family of 4 on that and not need to supplement! It also said people on food stamps overbuy on convenience and prepackaged foods. How about oatmeal, dried beans, rice, peanut butter, using coupons??? I didn't see one coupon being handed over. Also everyone was well dressed and overweight. It's easier to complain about food stamps not being enough than to be frugal and put more effort into the grocery shopping.

This point illustrates several of my beefs with how our tax money is spent. Specifically, I take issue with the size of the "assistance" (my family too could easily feed ourselves for less than $550 per month), the lack of "helping yourself" effort that many of these people seem to show (for example, not really "shopping" for the best deals like the rest of us do) and the fact that many of these people are better dressed/have luxuries that people who aren't on assistance can't afford. It just seems so wasteful on so many fronts.

As I've said before, I'm all for helping the poor (that's why I give to charitable causes) and would even be willing to pay MORE in taxes if I thought the government wasn't wasting or mis-allocating a good portion of it. But I find it hard to support a system that's so out of whack that examples like the one above seem more like the rule than the exception. It frustrates me to no end.

Am I reading this the wrong way? Maybe there's a point of view I haven't considered? Thoughts?

July 30, 2008

I was at the big ShopRite can can sale and they were out of one of the items I wanted, so I requested a rain check for it and I then asked, "What else are you sold out of that people are getting rainchecks for?" and she told me about 4 other items that I can use, but didn't have on my list this time and I got rainchecks for them too! :)

Of course, if you will never need the item, there's no need to get a raincheck (and then buy something you don't need.) But if it's something you regularly buy, why not ask for a raincheck and then buy the item (at the sale price) when you need it?

1. They must be talking about completely replacing the roof -- old shingles and wood off -- new wood and shingles on. Otherwise, it wouldn't cost nearly that much (unless the house is HUGE.) We had our house re-roofed a few years ago and it was somewhere in the $4k range.

2. The "turning an attic into a bedroom" seems like a clear winner to me. I'd do it in a heartbeat if we had a useable attic.

3. Wow. Kitchens and bathrooms are EXPENSIVE!!!

4. Landscaping gives a 100% payback. Good to know. This might be something we think about as we decide to sell our house.

We're not looking to do much to our home since we may be moving and have much of this covered, but for those of you thinking about home improvements and wanting a decent payback, this list serves as a good guide.

In addition to these, I had this comment left on my site yesterday identifying another home that's in trouble:

I live in the same county as the home in Port Deposit, MD that was recently featured on Extreme Home Makeover - the father had recently died, and the mom and two teenagers have a horse riding program that helps kids with disabilities.

In our local paper I recently saw an ad for a dinner and raffle to help the family keep the new, expanded facility afloat. I lay a large part of the blame on the show producers - if the family couldn't afford to fix up what they already had, how are they going to support an even larger operation? It's a nonprofit too, if I remember correctly.

I just don't understand what good it does people to leave them with a giant home to maintain when many of the people featured are already having problems making ends meet.

I remember that episode -- it was very touching. Aren't they all?

I also found details on this home that's in trouble as well. Same problems -- poor family who couldn't afford to hold on to a huge house and all the associated costs. A few details:

Boey passed away in late December and now, the family is struggling to pay for the expensive new home.

The Extreme Home Makeover Crews demolished the Byers old house, but the old mortgage still stands. There's still $250,000 dollars left on the old mortgage that they have to pay, plus they're paying property taxes for the value of the new home because it's worth more than the old home was. On top of that, utility bills now cost anywhere from $500 to $700 dollars a month.

I'm sure there are more of these either happening or about to happen. When someone who can't afford a small home gets a big, brand new, expensive place, there's bound to be financial trouble eventually.

Maybe it would be better to build a smaller home and give them some cash to get them back on their feet? Then again, that doesn't make for good TV. Also, if they have poor money skills, they're likely to blow through the money quickly. Not sure what the solution here is.

Here's a piece from the Wall Street Journal which talks about the declining value of a college degree. But if you read deeper into the article, it notes that there's still a huge advantage to having a college degree. To note:

To be sure, the average American with a college diploma still earns about 75% more than a worker with a high-school diploma and is less likely to be unemployed.

I think they're trying to create a story where none exists.

Ok, maybe a small one exists -- maybe a college degree isn't worth as much as it once was. Maybe and maybe not. Anyway, here's my take on the whole issue of the value of a college degree:

1. Any loss in value of a college degree is likely due to the fact that more and more people are getting degrees than ever before. As such, the supply of college-educated workers has grown while demand has likely seen less growth. And when that happens, prices (in this case salaries) decline. Of course this varies by degree/job type, so selecting your salary is significantly impacted by the selection of your major/occupation.

3. To be prudent financially, you need to match the cost/debt of college versus the expected payout. In other words, borrowing $100,000 for a job that pays $18,000 a year probably isn't a great financial move. Then again, borrowing $100,000 for a career that pays $500,000 a year probably is. Of course you need to take into account what you'll like doing, but even so, the first numbers likely will doom you to financial hardship even if you love what you're doing. Translation: you better REALLY love it, because it will make much of the rest of your life difficult.

Most people can't wait to claim their lottery winnings, but when Peter Dushop realized he hit the jackpot last August he didn't rush out to claim his $3.6-million prize.

Instead, the 24-year-old realtor from Maple Ridge, B.C., put the winning Lotto 6/49 ticket in a safety deposit box and only told his mom about the win.

"I felt that was the best way to go, I needed some time to reflect on it," said Dushop on Monday, when he collected his cheque.

Sounds like a wise move. Of course, it did come at a cost:

All the patient waiting did come at a cost to Dushop — he lost a chance to collect about $100,000 in interest. But he said it was worth taking the time to really think about how it would change his life.

In the August issue of Money magazine, they list gift cards as being potentially the worst gift ever (if you get one from a place where you don't shop.) They also cite the following stats about gift cards:

49% of Americans have at least one unused gift card

The average number of gift cards that people have is 3.7

We currently have several unused gift cards as follows:

Sears - Left over from my elliptical issue with them. We're saving it for Christmas purchases and/or for work if/when we get our new house.

Macy's - Left over from Christmas last year. We hardly ever shop there and will probably use this for Christmas gifts this year.

Local ice cream place -- My daughter received for her birthday last year.

Bed Bath and Beyond -- From a rebate (I hate those things!)

I have a list of the cards we haven't used and I make sure we do eventually do use them, but it requires some diligence. I can see where others who aren't quite as organized could lose track of them.

The Money piece suggests people resell their cards at PlasticJungle.com if they'd rather have the cash. Anyone used this site (or one like it)? Thoughts?

Here's an email a reader recently sent me about his success with the Blue Cash from American Express card:

I know you love getting these, but here's another. I still have a month to go but I'm constantly forgetting to check how much it is:

Gas, Grocery & Drugstore: $9,809.99 -> $409.14 (4.17%)

Everywhere Else: $27,374.59 -> $365.96 (1.34%)

Total: $37,184.58 -> $775.10 (2.08%)

Finance Charges YTD: $0

This is the only card we use, given the choice (there are a few places that only take MC, so we have a Citicard). We put just about everything on there. In fact, we probably only spend about $200 a month in cash. We had a baby this year, so a lot of the "everywhere else" spend is medical that gets reimbursed from our flex spending account. We had another bunch of those charges this month, so I'm pretty sure the total reimbursement will be almost $900.

2. He's making the most of his card by following two of the major principles in maximizing your cash back rewards -- charging all he can on the card and picking a card that's tailored to his spending. The high charges in the g/g/d areas is what makes this card a real winner for him.

3. Over 2% return is GREAT!!!!! Hard to beat -- especially with a single card strategy.

July 29, 2008

Here's a great comment a reader left on my post titled Six Problem Areas to Watch When Buying a Home. I commented that if we buy a new house I want to be sure and follow the inspector around and ask him questions. A reader responded as follows:

You definitely want to follow the inspector around. If you find a good one (get referrals) then they will point out things that will come in handy later. They may not necessarily be problem areas but things worth knowing. For example, when we bought our house last year, our inspector told us such things as: that the roof was fine but predicted how it would eventually wear down and what signs to look for to show that it was breaking down, the insulation level in the attic that was up to code but could be improved (and happy to report that it since has been!), improvements that could be made in the drainage system to take it from acceptable to top notch, and so on. In other words, you want an inspector that won't just verify that things work as they should, but will help you understand how they can work better.

Also, I'd shop around. Call at least three companies. It's hard, but if it's possible try to talk to the inspector directly to see if you can get a sense for how open they are. Your realtor should be able to give you a list, but you should also find out from friends or family who is (or isn't) recommended. When you call, make sure you find out exactly what they do and don't do beforehand. On ours, he didn't go all the way through the attic, just looked through the access panel. Same with the roof, he went on the first level but not all the way to the very top (he used binoculars for that). He also wouldn't turn the sprinklers on as there was still a slight chance of a freeze. We found that this was all pretty standard, but make sure you press them to what they will, and more importantly, what they won't do. They'll usually do those other things, but of course for more money, if those things are areas that you are concerned with, and it helps to know that up front.

Some good tips in here. I'm assembling a list of questions I plan to ask the inspector if/when we ever get a new house and I'll share those with all of you at some point.

Some more facts from our discussion yesterday. For those who missed it, one of the homes from Extreme Makeover Home Edition is facing foreclosure because the owners used it as collateral on a now failed business. Today's update:

ABC said in a statement that it advises each family to consult a financial planner after they get their new home. "Ultimately, financial matters are personal, and we work to respect the privacy of the families," the network said.

Some of the volunteers who helped build the home were less than thrilled about the family's financial decisions.

"It's aggravating. It just makes you mad. You do that much work, and they just squander it," Lake City Mayor Willie Oswalt, who helped vault a massive beam into place in the Harper's living room, told The Atlanta Journal-Constitution.

It would make me mad too. What a waste.

Wonder if they ever did consult a financial planner. Maybe he got them into the mess? ;-)

Will a collection of hedge funds, carefully selected by experts, return more to investors over the next 10 years than the S&P 500?

Protégé has placed its bet on five funds of hedge funds - specifically, the averaged returns that those vehicles deliver net of all fees, costs, and expenses.

On the other side, Buffett, who has long argued that the fees that such "helpers" as hedge funds and funds of funds command are onerous and to be avoided has bet that the returns from a low-cost S&P 500 index fund sold by Vanguard will beat the results delivered by the five funds that Protégé has selected.

[The bet is] between Buffett (not Berkshire) and Protégé (the firm, not its funds). And there's serious money at stake. Each side put up roughly $320,000. The total funds of about $640,000 were used to buy a zero-coupon Treasury bond that will be worth $1 million at the bet's conclusion.

It's always funny to me that many people point to Warren Buffett as an example of why NOT to invest in index funds (I get comments to this effect quite often). And yet, Buffett himself advocates index funds for the vast majority of investors. Kind of ironic, huh?

For those of you who feel so inclined and have a few moments, please stop by and visit my friend (and fellow money blogger) NCN who has a daughter sick in the hospital. I'm sure he'd appreciate you leaving him a few words of encouragement, as would I.

I've never seen a detailed list of the pros and cons of paying off your house (I'm sure it exists, I just don't remember seeing one) until I ran into this piece from Wise Bread. Here's a summary of what they listed as the pros:

You do not need a credit history.

Risk free savings.

You actually own your house.

You are not leveraged.

You can often negotiate a better deal.

And the cons they list:

Less liquidity.

You are not leveraged.

No tax advantage.

They end with a list of the situations when it makes sense to pay cash:

The amount of cash you spend does not consist of a significant portion of your liquid assets.

The interest rate on a mortgage is higher than what you can earn on your other investments.

The amount of savings you get from an all cash deal versus a loan deal is significant.

You do not want to deal with a credit agency in any manner.

The one I'd add: you prefer to have no debts.

For us, our home does not make up a significant portion of our liquid assets. We have a house that's far below what we could afford and our investments have grown nicely throughout the years. We also prefer not to owe any money to anyone. These two issues are the main reasons we don't have a mortgage.

Things MAY change for awhile if we buy a new home. Since we're thinking of trading up, we may have a mortgage for a few years depending on what we buy, what we get for our current home, when we buy, etc. We're currently saving at a good rate per month for the new house, and if we don't buy something this year, it's likely that between what we'll have saved and the sale of our current house, we'll be able to pay cash for the new place. Only time will tell.

"The rich," wrote F Scott Fitzgerald, "are different from you and me." So when they want more living space but they don't want to move from their fashionable address they dig in... literally. Unfortunately, the digging is undermining neighbourly relations.

Increasing numbers of people in affluent areas of London, such as Kensington and Chelsea, are excavating under their houses. Wealthy homeowners are building underground rooms housing everything from swimming pools and gyms to home cinemas.

I'm going to be taking 10 days of vacation in a couple of weeks and I'd like to keep this blog going with fresh, new content. If anyone out there would like to write a guest post (which would include a link back to your site), then email me and we can set something up.

FYI, I'll need the completed posts by this Friday, so if you're interested, please don't delay.

Here's an issue I'd like to hear your thoughts on: is it fair for me to dump my real estate agent? I'll give you a bit of background and some of my thoughts, then you can weigh in with your opinion.

The Beginning

Two springs ago (March 2007) when we began thinking seriously about buying a new home, I asked friends, family, co-workers and the like for their recommendations on good real estate agents. I got back one response (I guess finding a good agent is harder than most people think). A trusted friend told me that one guy was the best agent he'd ever worked with (my friend worked as a loan officer at a bank.) He said the guy knew our target area and he sold tons of homes. I checked him out a bit online and true enough, he was among the top sellers on his firm's (fairly large) list of agents. (I think he was in the "gold club" or some such designation.)

We asked this agent to our house for an interview to see if he was the real deal. He wasn't. The best I can say about him was that he was less than impressive. He was poorly dressed, had bad interpersonal skills, and seemed somewhat shady. We decided to pass.

We also considered the agent who sold us our home. We liked him a lot on the buying side, but eventually passed on him as well since we thought he wasn't aggressive enough (and we wanted someone who could sell our house too). So we decided to stay on our own for a bit.

Our Current Agent

A month or so later, we met our current agent completely by accident. We called her up to see a property she had listed. We met her at the home and she and my wife hit it off quickly. The agent offered to show us any houses we wanted to see in the future. So the next time we wanted to look at homes, we called her and she set it up. She also eventually set us up on her website so I could get email updates from the MLS -- giving me lists of homes that fit our criteria. As we received updates on these homes, we'd call her up and she would show them to us. This process kept repeating itself for months, throughout the summer. Then, after taking the winter off, we picked up the process again this spring and have been looking since.

Our Agent's Positives

There are many positives to our agent including the following:

She's always nice, cheerful, and friendly.

She's very available and willing to see homes on our schedule (she's probably shown us 40 homes in the past 16 months).

She has a decent website that sends me the info I want (though it is a bit clunky)

Our Agent's Negatives

Unfortunately, our agent has some negatives as well:

She's a weak negotiator/representative for us. If we'd had a good, competent agent, I think we would have bought this house. Yeah, the seller was a stinker, but our agent did nothing to work the deal with the other agent. He basically stared her down her and we made no progress. We might have even purchased this house if our agent had been a bit aggressive and worked to get the deal we wanted. Then again, maybe both deals weren't workable. But I do feel she's not really an advocate for us. Not that she doesn't want to be, I just don't think she has the skills for it.

She's not pro-active. Basically, I'm finding the properties that fit my criteria and sending them to her to show us. She's not looking one bit for us. Yeah, she sets up the appointments, but she's not proactively contributing to our house search.

She doesn't know very much about the real estate business. I've asked her basic questions and she hasn't known the answer. Worse yet, she'll simply say, "That's a good question!" and forget I asked it. I'd prefer, "I don't know. Let me find out the answer for you."

Ok, before I go any farther, let me state that I'm aware that the way we selected our agent (by accident) is probably the worst way of picking one. Stupid. Lazy. I know, I know, I know. I've kicked myself a million times for letting it happen. Just wanted to state that in case someone wanted to rant about it. ;-)

The Bottom Line

I've basically come to the conclusion that she's a poor agent and we're not served very well by her. And yet, I feel we owe her something since she's put so much time and effort into showing us all the homes. My current plan is to stick with her throughout the summer, then dump her if we don't find anything. This will have given her two selling seasons (April though September) to find something for us.

There is still a lot here that I didn't share due to space, but I at least wanted to put down the basics so you could get a decent overview of the situation. What do you think we should do?

Here are some interesting stats I found in the July issue of Money magazine:

Percentage who think couples should talk more about money:

Men -- 21%

Women -- 33%

Percentage who think couples should talk more about sex:

Men -- 29%

Women -- 15%

Ha! What a shocker, huh? ;-)

A few thoughts from me:

1. One-third of women want to talk more about money. This seems like a fairly high number to me. Many must be in the dark about their finances.

2. Though I expected men to score higher on the sex question, I'm surprised so many wanted to "talk" more about it. What is there to talk about?

3. Would the questions be better if they were "percentage who think couples should spend more time managing their money" and "percentage who think couples should spend more time having sex"? Now THOSE would be interesting responses!

July 28, 2008

Believe it or not, there once was a time when preparing and filing your own tax return wasn’t that difficult. But over time, the tax law has grown and become more complicated, leading many Americans to seek help on tax matters. Here are some instances when you might benefit from hiring a tax professional:

You’re not familiar with tax law. According to the U.S. Treasury Inspector General for Tax Administration, in 2007 Americans forfeited some $4 billion in phone tax refunds, in part because they didn’t know the refund existed. Tax professionals are up to date on current laws, and often find deductions that can offset the cost of paying to have your taxes prepared.

Your taxes are complicated. Have you moved out of state recently? Do you own your own business? Buy and sell investments? The more complex your taxes, the more paperwork that’s required, and the more likely it is that a tax professional would be a worthwhile investment.

You have better things to do. The IRS estimates it takes an average taxpayer 13 hours to complete a tax return. If your time is worth $10 an hour, that $130 could help pay for someone else to do your taxes.

You want help in an audit. If you’re audited, most tax preparers will represent you if they prepared your return.

You want a quick return. Tax professionals usually file returns electronically rather than by mail; that means if you’re due a refund, it will arrive sooner and can be deposited directly into your bank account.

If your taxes are relatively simple, or if you enjoy preparing your own return and feel capable of completing it, then go for it. But the more of these categories that apply to you, the more you’ll want to consider hiring a professional.

Just received word that there's a new edition of Patients Beyond Borders: Everybody's Guide to Affordable, World-Class Medical Care Abroad coming out at the beginning of August. I loved this book when I first read it a year or so ago and a TON has happened in the medical tourism industry since that time (and the industry continues to change/evolve almost daily.) I'll be receiving a copy of the new book soon and will give you my thoughts on it, but for now I wanted to share a few interesting points the publisher highlighted when she sent me a recent email on the book. Her comments:

Over the past few months and since the launch of the First Edition, medical travel has seen some tremendous changes:

The American Medical Association (AMA) has published its AMA Guidelines on Medical Tourism.

In the past year, more than 50 new international hospitals have gained American accreditation through the Joint Commission International (JCI).

Two large US hospitals will soon open full-service medical facilities abroad.

The number of medical travelers worldwide has jumped to nearly 3 million—180,000 from the US alone.

For the first time, more patients are leaving than entering the US for medical treatment.

The issue of affordable health care is not going to go away (we'll be hearing a LOT about it during the upcoming presidential election, I'm sure) and medical tourism may be one solution to our "crisis." And even if it's not part of the national plan for everyone, I'm sure that a growing number of individuals will select this option for their major health care needs. The fact that major insurers are now paying for medical tourism procedures is a HUGE step in helping this trend gain momentum.

One day while driving with her father, Hannah Salwen noticed a Mercedes stopped next to a homeless man sitting on the curb. "I said to my dad, 'If that guy didn't have such a nice car, then that guy could have a nice meal,' " the 15-year-old from Atlanta, Georgia, recalled.

And so began the tale of what the Salwen family calls "Hannah's Lunchbox." It started as family discussions about what they needed versus what was enough. Hannah's father Kevin, an entrepreneur, is on the board of the Atlanta Habitat for Humanity and is no stranger to community work, but he said this family conversation was life-changing.

"We stopped and paused and thought about what are the things in the world that could really make a difference, a little bit of difference in the world," he said.

They talked about selling their cars or other things, but it was Hannah's mother, Joan, who came up with selling their 6,500-square-foot house, donating half the proceeds and then moving into a house half the size.

My wife and I have had the same conversation many, many times. We're doing so well financially and others are doing poorly. In contrast to the suffering going on around the world, it often seems selfish to accumulate so much wealth and material possessions (though we live well below our means.) We give a good amount of our income away to charity, but we could do more. Then again, aren't we allowed to enjoy the fruits of our labor? But how much should we enjoy and how much should we use to help others? The basic question is:

When is enough (wealth, possessions, etc.) enough?

Anyone out there grappling with the same question? I'd appreciate your thoughts and insights on the issue.

Do Heigl And Sheen Deserve TV's Biggest Bucks? -- "A new survey by Forbes Magazine names Charlie Sheen and Katherine Heigl as TV's best-paid actors. The Two and a Half Men cut-up earned $20 million in 2007, while Heigl pulled in $13 mil for her rotation on Grey's Anatomy. Will Smith was the big screen's biggest earner for the year, depositing $80 million into his bank account. Among the men, he was followed by Johnny Depp (a bargain at $72 mil) and Eddie Murphy (overpriced at $55 mil)."

What do you think are the most difficult purchases we make as consumers? Here are a few that I think are very difficult as well as the reasons I feel this way:

Homes -- The facts: 1) it's an expensive purchase, 2) we buy homes infrequently and thus don't have the experience often, and 3) it's generally an emotional time because it's not only a purchase but it's where we'll spend a good deal of time. These three combine to make buying a home a very difficult purchase for most people.

Cars -- Expensive purchase, not done often (lack of skill by most buyers) and often dishonest salespeople make buying a car a nightmare for many people.

Beds -- The whole bedding industry is in on a conspiracy to confuse their customers. Identical products are named differently at different retailers, making comparing on price almost impossible. And it's a product that you don't know if you'll like or not until you buy it, but once you buy it it's difficult if not impossible to return. Oh yeah, and the fact that you'll spend a good portion of your life on it makes a big difference too.

Those are the three that come to the top of my mind for now. Do you have any difficult purchases to add to this list?

Money magazine asks if index fund investing is over. It's no secret that results for the S&P 500 have been pretty shaky for the past decade. Granted, you can expand your index investing to include many more companies, but is it still a good strategy? According to Money it is:

The verdict: No need to get fancy now. Traditional indexing is still hard to beat.

July 27, 2008

The Money Blog Network is doing a group writing project this week on the best advice for new entrepreneurs. This is my contribution.

I've never been a "true" entrepreneur. Sure, I've had side businesses and hobbies that have made some decent money, but I've never fully committed to entrepreneurship by quitting my job and going out on my own. So my advice may be "tainted" a bit accordingly. Just wanted to state that upfront so you all know where I'm coming from.

Anyway, here's my best piece of advice for new entrepreneurs:

Don't quit your day job until you've got at least a decent start on your new business.

1. Frequent examples of getting rich quickly and it not working out: lottery winners.

2. I think people who do get rich quick often lose much of their wealth because they haven't had time to develop the skills necessary to manage money successfully. In addition, many of them start to spend wildly thinking they have all the money in the world. They don't seem to realize that even a fortune can be spent rather easily. Finally, they also probably don't put as much value on their quick-gotten wealth since they didn't earn it.

3. On the other hand, those that earn their money over time do develop skills to handle money correctly and they value it more since it was earned with their own hard work.

July 26, 2008

Here are a few interesting pieces I found while surfing the web the past couple days. I thought you might like to check them out as well:

US home foreclosures jump 14% in 2nd quarter: survey -- US home foreclosures leapt nearly 14 percent in the second quarter from the previous quarter, research group RealtyTrac said Friday in a sign of deepening housing woes. On an annual basis, home foreclosure filings soared 121 percent from the same period in 2007, RealtyTrac said in releasing a survey of the country's 100 largest metropolitan areas.

Sounds like prices will be going down quite some time -- good news for home buyers. Then again, it's not all good news...

Rates on 30-year mortgages jump sharply -- Mortgage rates shot up this week with 30-year mortgages climbing to the highest level in nearly a year, reflecting concerns in financial markets about the troubles at corporate giants Fannie Mae and Freddie Mac. Freddie Mac reported Thursday that its nationwide survey showed rates on 30-year mortgages surged to 6.63 percent this week, up sharply from 6.26 percent last week. That represented the highest level for 30-year mortgages since they stood at 6.68 percent the week of Aug. 1.

We'll probably take a 15-year mortgage when we buy, but still, not great news for us.

Inflation May Offset Pay Increases in '09 -- But even with a 3.5% raise, most workers will likely find that extra cash consumed by rising costs for everything from food to gasoline. The latest report from the U.S. Labor Department showed inflation rising at a brisk 5% in June -- more than the raise most employees will receive in 2009.

Great. Just great. We're earning more and going backwards.

She Won a Fortune With a Cookie -- Carolyn Gurtz, a Maryland resident, took the million-dollar grand prize in the Pillsbury Bake-Off with her Double Delight Peanut Butter Cookie.

Taking Aim at Military Scams -- Military personnel are often young and transient, but they earn a regular paycheck from Uncle Sam. That makes them prime targets for shady sales practices and financial criminals.

It never ceases to amaze me what some people will do to cheat others out of money.

A free way to check out used cars -- Insurers offer buyers a new resource for uncovering vehicles' hidden histories of theft or damage. It's a great start, but nothing replaces a good inspection.

A year ago when the markets were all setting new highs, people were asking what they should do with their retirement portfolio. I answered, "Rebalance." Now that the market is setting new lows, I get the same question, and my response hasn't changed.

Rebalancing requires discipline. You set a target asset allocation for your investments and then periodically buy and sell different investments to stay focused on your objective. Without rebalancing, those categories that do well may continue to grow as a percentage of your portfolio until they significantly underperform the markets. The ones that do the best often bubble and finally burst. Rebalancing avoids this needless anguish.

Investing in an S&P 500 index fund does the opposite of rebalancing. The S&P is a capitalization-weighted index. A stock's capitalization is the total outstanding shares multiplied by the stock's current price. Therefore, those stocks whose price has appreciated comprise a greater share of the index. The S&P automatically increases its holding in stocks that have gone up and decreases its holdings in stocks that have gone down. This is the opposite of what you want.

Having the right asset allocation in the first place is an essential part of rebalancing. Rebalancing back to an S&P 500 allocation misses the emphasis on value stocks that will help your portfolio returns.

Stocks that have decreased in price have a lower price-to-earnings (P/E) ratio. They are called "value stocks." These stocks on average do better than growth stocks. But capitalization-weighted indexes such as the S&P 500 miss this method of boosting returns.

Several new investment products tout what is called "fundamental indexing." They set target allocations based more on earnings than price and therefore gain a value tilt. This is a good strategy, but the funds using it are currently charging higher fees and expenses than necessary. As expenses on these funds drop, they may prove to be a better investing strategy. In the meantime, you can develop a less expense asset allocation with the same value tilt simply by putting part of your asset allocation into a value fund. Adding a large-cap value fund to your S&P 500 fund will emphasize those stocks with a low P/E ratio. A value fund will sell stocks whose price has appreciated enough that they are no longer considered value. And it will buy stocks whose price has dropped enough for them now to be considered value.

Portfolio construction begins with the most basic allocation between investments that offer a greater chance of appreciation (stocks) and those that provide portfolio stability (bonds). Decisions made at this level are the most critical in determining how well behaved your portfolio returns will be.

Even if you are creating a very aggressive portfolio, including some fixed-income investments actually increases returns. Stable investments provide some cash on the sidelines, and having cash to buy stocks after a market correction both boosts as well as evens out your investment returns. Thanks to the effect of compounding, smoother returns produce better returns.

Periodic rebalancing is the simplest and most common method. Waiting for an asset category to exceed some threshold and then bringing the allocation back within some tolerances seems to produce slightly better returns and lower volatility. Although different ways of rebalancing produce somewhat variable results, the method you use is not as important as committing to a regular rebalancing plan.

Crestmont Research studied the difference in returns between rebalancing every year versus every two years in varying types of markets. They found that in secular bull markets, rebalancing less frequently had a slight 0.3% annualized advantage, but in secular bear markets, rebalancing more frequently had a more significant 1.3% advantage. Another study of the same time period verified smaller advantages for even more frequent quarterly and monthly rebalancing. And a study of the Yale endowment attributed 1.6% of its portfolio returns to rebalancing.

Making an extra percentage point a year is significant. The Crestmont study concluded, "In choppy and volatile markets, a more frequent rebalancing approach can add significant additional return to an investor's portfolio. Based upon recent secular market history, the risk (cost) of more frequent rebalancing in secular bull markets is far less than the opportunity from more frequent rebalancing in secular bear markets."

Crestmont's observation is true because a secular bear market does not simply go down every year. Rather these markets often swing up and down wildly. The Crestmont study analyzed the secular bear markets from 1966 to 1981 and concluded that rebalancing more frequently made the difference between experiencing positive or negative returns.

Keep in mind what rebalancing in a secular bear market means: buying stocks after they have gone down and selling stocks after they have gone up. Probably the point at which more frequent rebalancing pulled ahead the most was 1973 and 1974 when the market dropped 17% and then 28%, and more frequent rebalancing meant putting more money back into the markets. Then in 1975 and 1976 when the market rebounded 38% and 18%, respectively, it provided better results.

Rebalancing is as daunting as putting more money into the markets now after our recent declines. But it is also as prudent as taking profits off the table a year ago when the market was setting new highs. Rebalancing, always a contrarian move, helps investors make those emotionally difficult but safer and more profitable decisions.

Portfolio design and rebalancing is both a science and an art. It may be helpful to understand the physics of why a spinning ball hooks and bends. But when you are playing golf or soccer, it is the execution and follow-through that produces the desired outcome. Knowing that rebalancing boosts returns is useless unless you as the investor have the time, discipline and nerve to follow through and actually strike the ball.

Untended portfolios can quickly become more volatile. Thus frequent watching of a portfolio is required even if frequent rebalancing is not the best methodology. Watching your portfolio every day and choosing strategic inaction allows you to seize the day when the portfolio is significantly far enough out of balance to warrant action.

How frequently you need to water your garden is totally contingent on current weather conditions. Similarly, when you should rebalance your portfolio depends more on what the markets are doing than the calendar.

Rebalancing need not trigger a taxable event. You can do it when you are adding to your portfolio or during retirement when you are making withdrawals. Another way of rebalancing without triggering capital gains is to make the changes in your traditional or Roth retirement accounts. You can also pay dividends and interest in cash rather than reinvesting them. Then use this cash to rebalance by purchasing more in the asset category, which has done the worst lately. But even if you have to trigger capital gains, the capital gains tax is at an all-time low and will probably be raised in the future. So go ahead and rebalance your portfolio and generate those capital gains.

If your portfolio had the right asset allocation to begin with, we would currently be advising you to add to U.S. stocks or withdraw from hard asset stocks or fixed income. However, most of the portfolios we see for the first time already have too much U.S. stock and little, if any, hard asset stocks. Again, getting the right asset allocation is always the first step to rebalancing.

Watching the asset allocation balance on a portfolio may not seem like a very active strategy. But because it can increase your returns by over a percentage point a year, it is worth the time and effort. At a minimum, you should have a target asset allocation and an easy way to rebalance it at least once a year.

July 25, 2008

Summary: Men (or women) who decide to get on bended knee: Be warned. You could find yourself on both knees, facing a judge instead of a justice of the peace. That’s what happened in Florida this week, when a woman was awarded $150,000 after suing her former fiancé for calling off their wedding.

My take: He made promises, she relied on them, then he backed off. Seems like she's due something. Still, this seems unusual.

Summary: Use caution when something is advertised or said to be "free". No matter what high-pressure salesman says, if not in contract -- you don't get it. Read everything -- including fine print -- before signing anything. If it sounds too good to be true, check with the Better Business Bureau.

My take: Kind of common sense, but I guess it never hurts to repeat even very simple advice.

Proper course of action: Use this knowledge as an impetus to examine your own pay and value in the employment market, reviewing resources such as the U.S. Department of Labor's website and the Salary Guides published annually by Robert Half International. With an idea of what others in your area and with your skills and experience are paid, you can approach your manager and back up your request with relevant information that's not sensitive in nature.

My take: I agree. It's not really what someone else in your company makes that impacts your case for making more (you can't really mention it anyway, so it doesn't matter much). What's more important is what most other people holding your job make and how well you do your job. If you're paid below average and do a great job, you're an excellent candidate for a raise. If you're already paid above average and you're doing only a fair job, it doesn't matter what someone else in your office is getting paid (unless there are some really unusual circumstances), it's going to be hard to justify why you deserve more.

Dilemma 2: You are offered a new job, but you're happy with your current one.

Proper course of action: See how it compares with your current situation. Are there opportunities for quick and steady advancement? How competitive is the salary and benefits package? What is the corporate culture like? Assuming you're still interested, there isn't any harm in interviewing.

My take: I'd probably take the interview as long as I thought it was worth it -- that the new company had a good chance of offering me something I wanted but wasn't getting at my current job. Otherwise, I'd decline and stick with what I had. No use taking an interview (and likely a day off) if there's little chance of anything coming of it.

Dilemma 3: You have the opportunity to take on an important but difficult project.

Proper course of action: Ask yourself if you can handle the responsibility in addition to your current workload. At the same time, consider the abilities you'll develop by taking on the assignment. You'll improve your project management skills, meet people across the organization and potentially put yourself in position for even more challenging opportunities in the future.

My take: If you think you can do it (or even if it's close), I'd take it. The people that can handle difficult and important projects with success are the ones that get noticed and paid more. My advice would be to go for it and then do everything you can to make sure you over-deliver versus your superiors' expectations. If you do, you're well on your way to a major career jump.

30% value how people perceive their car and want them to be impressed by it. Another 29% are aware of how people perceive their car and don't want to be embarrassed by it.

39% pay with cash because they want to limit credit usage. 25% pay with credit because they don't like to carry cash.

55% will marry a woman who they trust enough to not need a prenup. 22% want a prenup but won't risk jeopardizing the relationship by asking her to sign one.

84% say men get screwed in divorce courts.

44% say the man should pay for the majority of dates until the relationship is established.

82% say it wouldn't bother them to be in a relationship with someone who made more money than them.

37% say the potential for career growth is the most important factor when considering a new job. 31% say it's the salary.

45% say women put too much value on a man's financial worth but men put a lot of value on women's looks so it balances out. 27% say women put too much value on a man's financial worth and it bothers them that women are so shallow.

61% say they wake up on a work day feeling not terribly excited, but bound to fulfill their workplace responsibilities.

46% have a retirement plan and are putting money toward it.

32% think a lump sum of $1 million would allow them to retire comfortably. 28% need a lump sum of $2 million.

31% would not stop working if they were financially able to, but they would use the opportunity to find the job they really want. 31% would start their own business.

30% say that what they hate the most about their job is that they are underpaid.

36% have no debt at all.

30% have one credit card. 25% have none.

41% rent because they can't afford to own.

59% measure their own financial success against their own goals.

Lots of interesting stuff here -- this is just the tip of the iceberg. Stop by if you're interested to read more.

I've already detailed how wacky my house-buying experience has been, but here's one guideline I think works. I call it the "sad rule" and my agent stated it this way when we were discussing whether or not we should bid on/bid higher for some properties:

Think about it this way: would you be sad if someone else bought the house at this price? If so, you probably have a good fit for you at a fair price. If not, something's amiss and you shouldn't bid on it at this price.

Since we look at the house-buying process from an unemotional standpoint -- one that's based on fair market value and data (as much as we can get in an often apples-to-oranges comparison of different houses) -- this rule makes a lot of sense to me. And it's helped us walk away from a couple places when the price was too high. Yeah, we might be sad if the place sold (if we wanted it), but if it sold at too high of a price, we wouldn't be sad since there's no way we would have wanted to have been in the buyer's shoes.

That said, this rule won't work for the emotional I-want-it-at-any-price sort of buyer. They'll be sad if they lose a house they "love" no matter what the price is.

What's your take on this rule? Good idea or bad one? Or does it even make any sense to you (did I explain it completely enough)?

Recently I had the chance to interview Steve Ely, president of Equifax Personal Solutions, about their Equifax ID Patrol service (they emailed me, I asked "why would I need this?", and an interview resulted.) Our interview is below, and after it, there are details on how you can win a free trial of the service. And for those of you wondering, no, I didn't receive any sort of fee for this. I thought the information and giveaways were worth running the interview. You can be the judge if you think this is correct or not.

Why do consumers need an identity theft protection product?

Identity theft is now surpassing drug trafficking as the nation’s number one crime, according to the U.S. Department of Justice. Right now, there are people who want to steal your personal information. To help themselves to the credit you’ve worked hard to build—and use it to open bank accounts and credit cards, take out loans, and even file for bankruptcy.

Consumers should not wait until they have become a victim to take steps to protect themselves. A proactive approach is the best way for consumers to protect themselves and minimize damage to their credit and financial health. That’s why Equifax designed Equifax ID Patrol -- to help prevent identity thieves from obtaining credit in their name and to alert consumers to potential instances of fraud sooner.

Fraud alerts are free, so isn’t that enough?

Fraud alerts alone are not enough. A comprehensive, credit monitoring-based identity protection product does even more to help consumers protect themselves and minimize the damage that can be caused by identity theft. An initial 90-day fraud alert is only an indicator to a lender that additional steps should be taken to verify that the consumer authorized a request to open a new credit account, increase the credit limit on an existing account or obtain a new card on an existing account, etc.

What makes Equifax ID Patrol different from other identity theft protection products?

Equifax ID Patrol gives consumers access to several comprehensive identity protection features all in one product.

The first feature is Equifax WebDetect, an innovative tool that constantly scans suspected Internet trading sites and provides alerts to consumers if their personal information (Social Security number or major debit or credit card numbers) is found

Equifax ID Patrol also features our Identity Theft Resolution Specialist, a trained specialist available 24/7 to help consumers understand the process of notifying the proper authorities, banks and other financial institutions in the event that their identity is stolen.

Our next feature is the Equifax Credit Report Control, an exclusive product that lets consumers lock and unlock their Equifax credit file online or by phone.

Finally, Equifax ID Patrol monitors a consumer’s credit file with all three nationwide credit reporting agencies for key changes — such as when someone opens credit in the consumer’s name—and sends them e-mail alerts within 24 hours of those key changes.

What other steps can consumers do to protect their identity?

On top of using an identity protection product, there are a number of steps consumers can take to safeguard their personal information.

Know who’s calling -- If you receive a call from anyone requesting personal identification information, you should not share any information before verifying the caller’s identity. If the caller claims to be calling on behalf of a specific organization, take the necessary steps to confirm the person’s relationship to that company. You may want to record the caller’s name and telephone number to call them back upon verification of their identity and association with a particular company.

Safeguard your Social Security Number -- Don’t make a habit of carrying your Social Security card with you. If someone steals your purse or wallet, they can use your social security number to apply for a job, credit card or loan. Your social security card is safest in a locked safe or drawer, out of sight, in your home.

If your SSN appears on your license, health insurance or Medicare card, ask your provider to use an alternate number such as a random or policy number instead. When carrying your cards, keep them stowed away in a safe place and only take them out when absolutely necessary.

Put your shredder to work -- Use a shredder to dispose of pre-approved credit card offers and other mail and documents displaying your name and personal information. It only takes a simple phone call for an identity thief to activate a pre-approved credit card in your name. Simply throwing these types of offers and other forms of personal identifiable information in the trash is not enough – identity thieves are not above rummaging through your trash.

By combining these steps with an identity protection product, consumers can lower their risk of having their identity stolen.

----------------------------------------------------

Hmm. Still not sure I need it. What do you think?

Anyway, here's how you can win one of three free trials of Equifax ID Patrol. It's a three-month trial -- after that, if you keep it, you'll be charged.

Here's how you can have a chance to win this giveaway right now:

1. Leave a comment below -- any comment.

2. Next week, I'll stop by the post, stop the submissions, and name the winners (who I'll select at random).

3. It will be the responsibility of the winners to check back to see if they are a winner and then email me their contact information.

4. I'll email the winners back and give them details on how to claim their prize.

A few rules for these giveaways:

1. I will be the complete and final judge.

2. Legal disclaimer: I can not guarantee the prizes. Equifax has said they will honor them, so I'm sure it will be fine, but since I can't control the prize distribution, I won't be held accountable if there's a mess up.

3. If you win something and do not contact me within a week of winning, I reserve the right to give your prize away to another winner. Note again: I won't track down the winners -- it's your responsibility to come back and see if you won.

2. Shape Up or Pay Up. Expect employers to take a more personal interest in your well-being through mandatory corporate wellness programs.

The issue of heathcare costs is not going away and employers will be trying in any way possible to lower their liability to costs. I'm sure we've yet to see even the beginning of the "creative" methods they will use.

3. Why Your Degree May Say "Yahoo! U." So that workers can hit the ground running, work more efficiently, and advance more quickly, Challenger, Gray & Christmas believe that large corporations will begin to create their own degree programs.

Interesting thought: will a "degree" from a top-flight business (think Google for the web, Procter and Gamble for marketing, Toyota for operations, etc.) eventually be worth more than a college degree? Could be (but you'd probably need a college degree to get into the company-specific program anyway.)

4. Recruitment Goes Global. If you ever dreamed of working in another country, the possibility is drawing ever closer.

And the pay will likely be better. I know several FMF readers are US citizens working overseas. Any suggestions, ideas, comments, etc. you can add to this thought would certainly be useful and appreciated.

5. Kiss Your Cube Goodbye. In order to maximize employee interaction and teamwork, many companies will eliminate the isolating cube and redesign their workspace to feature common areas, conference rooms, and tables, as opposed to individual desks.

I don't know. I'm enough "old school" to like my own space. You?

6. HQ's Get 86'd. The image of a hulking headquarters building will fade as fast as old newspapers in the years to come.

If this means working at home, I'm all for it!!!

7. Athletes Aren't the Only Free Agents. Baseball and basketball players, among others, aren't the only talented people who can be free agents. Expect more white-collar workers to follow their example. "The move to hiring temporary and contract employees, freelancers and consultants is beneficial for both companies and workers," Challenger says.

Wow, this would completely re-write the workplace rules if it's ever used broadly. Lots of implications for employers and employees alike.

July 24, 2008

Here are several more stories of people saving money by shopping around for car insurance. They were left as comments on my post titled Real-Life Money Saving Example. The first:

I'd been meaning to comment on our car insurance switch as well. We had been with Nationwide for ages (basically since I got my license 18 years ago!). I plugged in my information at one of those insurance quote websites (be prepared for the onslaught of phone calls, I used GrandCentral to screen them), and after reviewing a couple of them, I went with AIG as well. Two cars on Nationwide: $1440.20. Same coverage on AIG: $660.66. Yearly savings: $779.54.

Almost $800 savings for a bit of shopping. Not bad at all!

The next example:

I just switched my car insurance as well. I had been with Farm Bureau since I turned 16. My parents have been with them for all eternity as well. My monthly premium for a 2003 Toyota and a 2006 Kia was $140! Granted, I had a minor, weather-related accident (single car) a couple of years ago so I can understand that it has gone up.

I did the online quote thing too (and got inundated with calls!) and heard from Liberty Mutual. Turns out I got a discount based on where I went to college in addition to them not holding the accident against me. My annual premium is now $1024, down from $1680. The only down side is that I will lose my multi-policy discount with my FB homeowner's insurance, but I have already paid through June 09 so it is no big deal right now. Even without that discount, FB is still cheaper on the home front, and I am still saving $45+ per month!

Over $500 savings per year! And there's more:

I too was with State Farm forever. I have nothing against them other than the high rates. Other than that, I loved them. However, being just out of college, I need to save money.

So I went on JD Powers to read their reviews of insurance companies and found Erie Insurance (I think they only service a few states around Lake Erie of course). They were extremely highly rated (better than State Farm). I called them up and got a quote which was way less.

Now, I just bought a 2009 Toyota Corolla and my wife has a 2003 Mazda 6, both relatively new cars I guess. For both of us, we pay $540/6 months total... Less than half of what State Farm was charging. Not to mention, they consider you an adult at age 24 and can add on other discounts (employer for example).

I also get renter's insurance for $11/month which is pretty much standard.

I haven't had to use them yet in an accident, but so far they've been good. Also, they sell through independent agents which drastically cuts down on costs cause they don't have to pay as much commission as State Farm does.

Saving over 50% is good, right? ;-)

Here's one more comment:

A similar thing happened to me and in my case it was GEICO (yes GEICO) that gave me a SUPERB deal on Auto and American Family who gave me a fabulous deal on Home insurance. Between these two new policies (3 cars and 1 house), I save $600 per year with better coverage (went to $1M liability coverage since I have contractors at my home all the time for additions/improvement/maintenance).

Bottom line is that I hired the BEST companies for their 'sweet spot' and got myself a 'honey pot worth $600 per year' for better coverage. HOW CAN YOU BEAT THAT?

I work through lunch most of the time -- takings a "long lunch" a couple days a week (our offices are off the beaten path a bit so a lunch anywhere is a two-hour trek.) I'll count the "working through lunch" and "long lunches" as a wash.

I don't work on weekends (though I do check my email via Blackberry and respond/take action if needed.)

I travel a bit, but not so much that it impacts my life dramatically.

Given these, I work nine hours per day, five days a week, or 45 hours per week.

Three years ago, I made a decision that changed my relationship with money: I stopped spending, and started saving, every five-dollar bill that passed through my hands. Squirreling away each and every $5 received as change from a cash transaction didn't require any complicated savings strategy, but it has paid off, to the tune of $12,000.

Anyone else out there have some sort of unusual way to save money that's worked for you?

That's why I like this Yahoo piece that lists five signs that you're living beyond your means. It serves as a good guide to keep us all aware of money moves that could derail our finances. Here are their thoughts along with some comments from me:

I'd change this to "you have credit card balances." Carrying any balance on a credit card is a BIG sign that you're spending more than you earn.

Sign No. 4 - More Than 28% of Income Goes To Your House

Taxes and maintenance are the only things I pay on our home since we haven't had a mortgage in over a decade. If we buy a new place, the longest we should have a mortgage is a couple years. But if we don't buy something this summer, it's likely we'll be able to pay cash for the new place outright as we'll have a few more months of saving ahead of us.

Sign No. 5 - Your Bills are Spiraling Out of Control

Uh, yeah. Of course.

So, how can you spend less than you earn (or widen the gap if you already are doing so)? Only two ways -- spend less or earn more.

2. Accounting ($47,429) -- Job outlook: Thanks to retirees and a faster-than-average job growth due to new business and changing financial laws and regulations, accountants can enjoy favorable job opportunities.

3. Finance ($48,616) -- Job outlook: Personal financial advisors are projected to be among the 10 fastest-growing occupations. Though job growth is strong across the board, competition is still keen for finance positions.

4. Business Administration/Management ($44,195) -- Job outlook: Jobs are projected to grow as quickly as average among all occupations. Competition for top-level business administration management jobs will be high while more opportunities will exist for lower-level management jobs and facility managers.

5. Civil Engineering ($50,940) -- Job outlook: Employment growth for civil engineers is expected to move at a pace that is faster than the average for all occupations.